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Energy, finance deals key to pivotal Cop 28 success

  • Market: Biofuels, Coal, Condensate, Crude oil, Hydrogen, LPG, Natural gas, Oil products, Petrochemicals
  • 05/12/23

Agreements that address the role of fossil fuels and payments for loss and damage will be needed if the summit is to succeed, writes Caroline Varin

Success at the UN Cop 28 climate summit in Dubai this month will be defined by how strong a signal global leaders are ready to send on energy and finance. Whether the meeting is the pivotal event that many are hoping for may depend on the outcome of talks over two sticking points — the role of fossil fuels and who will pay for loss and damage incurred from the effects of climate change.

The stakes are higher than ever this year. A UN report shows that global temperatures are on course to rise to 2.5-2.9°C above pre-industrial levels, and could rise by 3°C this century if efforts on mitigation — cutting emissions — stay the same as today. The Paris climate agreement sets a goal of limiting global warming to "well below" 2°C above pre-industrial averages, and preferably to 1.5°C.

Pressure is mounting for Cop 28 to agree on an ambitious energy package to triple renewable energy capacity and double energy efficiency by 2030, and support to include a phase-out of all fossil fuels is gathering.

Cop 27 last year reiterated language adopted at Cop 26 for a "phase-down" of unabated coal-fired power, despite a push from 80 countries to include language around phasing down all fossil fuels. But there has been a shift in rhetoric this year. Cop 28 president-designate Sultan al-Jaber is calling for a "responsible phase-down of all fossil fuels", and support is growing from the EU, the US, fossil fuel producers such as Canada and Australia, and vulnerable and developing countries.

But a lack of a united line on fossil fuel language — phase-out or phase-down, unabated or all — means that debates risk getting stuck on details, while key producers, including Russia, Mideast Gulf and African countries, and consumer China have signalled they would not support a phase-out. Some want a focus on cutting fossil fuel emissions instead and are seeking support for abatement technologies.

Decisions at Cop are rooted in countries' economies, think-tank E3G programme lead Leo Roberts says. At Cop 26, "countries felt comfortable backing [coal phase-down language] because it reflected a real-world trend, in which economics are firmly stacked against coal power". But "the same shifts are not happening on oil and gas", Roberts says. Coal, oil and gas production in 2030 is the level needed to limit global temperature increases to 1.5°C, according to the UN. Observers hope to see progress on coal, with calls from the US to end foreign financial support for coal-fired power plants. Global coal use continues to hit fresh highs and coal-fired power capacity is still growing.

Times tables

UN secretary-general Antonio Guterres reiterated his call for countries to commit to phasing out fossil fuels with a clear timeline, as well as tripling renewables capacity and doubling energy efficiency. Greenhouse gas emissions must be reduced by 43pc and methane by a third by 2030 in order to not exceed the 1.5°C limit, the UN's Intergovernmental Panel on Climate Change says.

G20 leaders have agreed to pursue tripling global renewable energy capacity by 2030 from 2019, and reaching a deal on this is one of al-Jaber's key goals. He is keen for parties to "build on the outcomes of the G20", but a deal could hinge on whether developing countries get the assurances they need on funding. Investment in Africa's energy sector needs to more than double to more than $200bn/yr by 2030 for the continent to meet its energy-related climate goals, the IEA says.

The world's two biggest emitters, the US and China, this month reaffirmed their 2021 agreement to co-operate on reducing power sector carbon emissions, cutting methane emissions and boosting renewable energy. This sent a positive signal, as strained US-China relations have weighed on co-operation for the energy transition. China unveiled a methane plan. And progress towards a 2021 global methane pledge could come from the US or the EU. Brussels recently agreed a law setting methane limits for fossil fuel imports from 2030. Al-Jaber — who is also chief executive of Abu Dhabi's state-owned oil company Adnoc — is working with the oil and gas industry for it to commit to halving oil and gas industry Scope 1 and 2 emissions — those from producing, transporting and processing oil and gas — and reaching near-zero methane emissions by 2030. "This could be important, but only if companies beyond the usual suspects adopt aggressive methane reduction targets," research organisation WRI energy director Jennifer Layke says. Methane emissions from human activities could rise by up to 13pc over 2020-30, an IEA report found.

Mitigation deals will hinge on how finance discussions progress, not only for the energy transition but also on adaptation and loss and damage. A lack of climate finance from developed countries obstructed progress at Cop 27. A key focus for developing countries is a $100bn/yr climate finance goal, which wealthy nations agreed to provide by 2020 but failed to reach. The OECD says the goal may have been hit last year, although the data are unverified.

German special envoy for international climate action Jennifer Morgan hopes this could "build some confidence". But it depends on how far developed countries are ready to go in setting a new finance goal from 2025. Some developing countries want the goal to be based on costs outlined in a 2022 UN Framework Convention on Climate Change (UNFCCC) report, which are similar to those recognised by the G20 — $5.8 trillion-5.9 trillion before 2030. Agreeing a new number will be difficult.

The same goes for discussions on loss and damage. A transitional committee agreed on recommendations for setting up a loss and damage fund at Cop 28. Parties are likely to stand behind the package, with none willing to risk the consensus as it could affect other decisions, WRI senior adviser Preety Bhandari says. But some members expressed reservations, and deep divisions remain on who should pay into the fund. Some say the list should include countries whose economic circumstances have changed since the UNFCCC was established in 1992.

Saudi Arabia signalled that it favours a "different approach" to contributing to multilateral finance. The EU has promised a "substantial" contribution, while Denmark and Germany also pledged some money, according to WRI. But there are no indications on the amount. Observers point to momentum around broader finance architecture reforms, and the opportunity to increase political pressure during the UNFCCC's first global stocktake, which will conclude at Cop 28.

Stocktake signals

The UNFCCC global stocktake is a five-yearly undertaking to measure progress towards the Paris accord, and is intended to inform the next round of emissions-reductions plans, due in 2025. It should provide all parties with a chance to reflect on past achievements and find common ground. It could also act as an anchor for finance and fossil fuel discussions during Cop 28.

The stocktake needs to "double down on what was committed in Paris in 2015, not just on 1.5°C, the mitigation targets and the clean energy transition, but on loss and damage, finance or building more multilateral cohesion", E3G senior associate Alden Meyer says. But the political response is likely to hit the same stumbling blocks that have hindered Cop negotiations so far. Australian energy minister Chris Bowen says he expects a "substantial and contested discussion". And contributions ahead of the conclusion prove him right.

"This is a particularly big moment — if it goes well, it will set up Cop 30 in Brazil [when new climate targets are due]," Meyer says. "If it goes poorly and doesn't send a clear signal, it is going to make it much harder to build trust over the next two years. And of course, we are running out of time."

GHG emissions

Climate finance for developing countries

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Trump threatens Mexico, EU with 30pc tariffs

Trump threatens Mexico, EU with 30pc tariffs

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US to loan 1mn bls crude to Louisiana refinery: Update


11/07/25
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11/07/25

US to loan 1mn bls crude to Louisiana refinery: Update

Adds details on crude quality issues from Mars pipeline. Washington, 11 July (Argus) — ExxonMobil will borrow up to 1mn bl of crude from the US Strategic Petroleum Reserve (SPR) for its 522,500 b/d refinery in Baton Rouge, Louisiana, in response to a disruption to offshore supply of crude for the facility. ExxonMobil warned suppliers last week of "serious quality issues" related to elevated levels of zinc in crude supplied by the Mars pipeline, which brings crude from a series of deepwater fields in the Gulf of Mexico to shore, according to market sources. In letters to suppliers ExxonMobil said the crude quality issues were "... significantly affecting the operations at our Baton Rouge Refinery," and that it would stop accepting Mars crude "... in an effort to avoid further damages." The US Department of Energy said today it had approved the loan to ExxonMobil, called an exchange, to ensure a stable supply of transportation fuels in Louisiana and the US Gulf coast. The agency said the crude loan will support ExxonMobil's "restoration of refinery operations that were reduced due to an offshore supply disruption." Chevron, one of the producers that contributes crude to the Mars pipeline, said it has "identified a potential contributing source to the Mars crude composition changes, which is associated with the start-up of a new well." Chevron said it was working to resolve the matter and does not expect it to affect current production guidance. In April Chevron started production from a new deepwater field , Ballymore, which ties into the Mars system. Shell, which owns a majority stake in the Mars pipeline, did not respond to a request for comment. Mars premium to WTI falls The August Mars premium to Nymex-quality WTI has dropped nearly $1/bl in the last week. The August Argus Mars volume-weighted average assessment on Thursday was a 9¢/bl premium to the Nymex-quality WTI Cushing benchmark, nearly $1/bl lower than a week earlier. Mars averaged a 63¢/bl premium for the August trade month through Thursday, but was at a $1.40-$1.50/bl premium at the start of the trade month. The August trade month started 26 June and ends 25 July. The SPR, which consists of four underground storage sites in Texas and Louisiana, held 403mn bl of crude as of 4 July. Under the exchange announced today ExxonMobil will eventually return the borrowed crude — along with additional crude as payment for the loan — to the SPR. The SPR's Bayou Choctaw site connects to refineries in Baton Rouge through the Capline pipeline. In 2021, the Department of Energy authorized a loan of up to 3mn bl from the SPR to ExxonMobil's refinery in Baton Rouge to address disruptions related to Hurricane Ida. ExxonMobil was initially scheduled to return the crude in 2022, but that deadline has been repeatedly pushed back, most recently to require a return of the crude by March 2026. By Chris Knight, Eunice Bridges and Amanda Smith Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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Congress resumes push to cut US shipping pollution


11/07/25
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11/07/25

Congress resumes push to cut US shipping pollution

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Brazil advances oil, gas decarbonization strategy


11/07/25
News
11/07/25

Brazil advances oil, gas decarbonization strategy

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USDA boosts soy view on biofuel policy changes


11/07/25
News
11/07/25

USDA boosts soy view on biofuel policy changes

St Louis, 11 July (Argus) — The US Department of Agriculture (USDA) today raised its projected US soybean crush for the 2025-26 marketing year following recent policy changes that are expected to increase domestic soybean oil demand for biofuel production. US soybean crush is expected to rise to a record 69.1mn metric tonnes (t) in the 2025-26 marketing year, the USDA said Friday in its monthly World Agricultural Supply and Demand Estimates (Wasde) report, up by 1.36mn t from the June report. The latest forecast marks a 5pc increase from volume projected for the 2024-25 marketing year. The higher outlook for soybean crush was driven by a substantial increase in anticipated soybean oil use for biofuel production, which the USDA places at 7.03mn t for the marketing year ahead, up by 27pc from the volume expected for the current marketing year. The increased biofuel use outlook follows US policy changes that significantly strengthen support for biofuels made from domestically produced feedstocks through changes to the 45Z biofuels tax credit and Renewable Identification Number credits generated through the Renewable Fuel Standard. The US is also proposing to require record biofuel blending into the US fuel supply over the next two years, including unexpectedly strong quotas for biomass-based diesel. With the increase in soybean crush, USDA expects domestic soybean oil production will rise to a record 13.6mn t in 2025-26, up by 4.1pc from the current marketing year. Additionally, the USDA revised higher its expectation for soybean oil imports in 2025-26 to 200,000t, up by 13pc from the current marketing year. Following an elevated export rate over the first half of the current marketing year, US soybean oil exports are projected to collapse in 2025-26, down by 73pc from the current marketing year to 318,000t. The reduction in exports, in combination with increased supply, is projected to exceed the gains in biofuel demand, increasing stocks to 758,000t by the end of the 2025-26 marketing year, up by 15pc from the inventory level projected for the end of 2024-25. Soybean meal supplies swell The jump in soybean oil demand is as also expected to result in a record level of US soybean meal production in 2025-26, up 4.5pc from 2024-25 to 54.3mn t, according to USDA. Both domestic use and exports of soybean meal are projected higher for the next marketing year following the increased supply outlook. US soybean meal exports are projected to reach 17mn t, up 7.5pc from 2024-25, while US soybean meal domestic use is projected to rise by 2.8pc to 37.9mn t. Soybean mean stocks are projected to increase as well, reaching 431,000t by the end of 2025-26, up 5.6pc from the level projected for the end of the 2024-25 marketing year. By Ryan Koory July 2025 USDA projections 2025-26 Chg from Jun 2024-25 Chg from Prior MY U.S. soybean oil supply and use ( mn t ) Supply -Beginning stocks 0.66 - 0.70 - -Production 13.59 0.27 13.06 - --Extraction ratio (pc) 19.67 0.00 19.83 - -Imports 0.20 0.07 0.18 -0.05 Total supply 14.46 0.34 13.95 -0.05 Use -Domestic disappearance 13.38 0.73 12.11 -0.14 --Biofuel 7.03 0.73 5.56 -0.39 --Food, feed and other Industrial 6.35 - 6.55 0.25 -Exports 0.32 -0.45 1.18 0.09 Total use 13.70 0.27 13.29 -0.05 -Ending stocks 0.76 0.06 0.66 - -Stocks-to-use (pc) 5.53 0.36 4.95 0.02 U.S. soybean meal supply and use ( mn t ) Supply -Beginning stocks 0.41 - 0.41 - -Production 54.30 1.04 51.98 - --Extraction ratio (pc) 78.54 -0.04 78.92 - -Imports 0.59 - 0.66 0.09 Total supply 55.29 1.04 53.05 0.09 Use -Domestic disappearance 37.90 0.41 36.85 0.09 -Exports 16.96 0.64 15.79 - Total use 54.86 1.04 52.64 0.09 -Ending stocks 0.43 - 0.41 - -Stocks-to-use (pc) 0.79 -0.02 0.78 -0.00 October-September markeing year — USDA, Argus Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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